Housing Supply and Homelessness

Lord Young of Cookham Excerpts

Thursday 5th December 2024 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I am grateful to the noble Baroness, Lady Warwick, for sponsoring this debate and introducing it in such a compelling and moving way. Like her, I also look forward to the valedictory speech from the most reverend Primate the Archbishop of Canterbury. I pay tribute to the work of the Church under his leadership in raising the profile of housing and identifying some solutions, and, in particular, to the report of his commission on housing, Coming Home, which was published in 2019. I am sure he will want to develop some of those themes in his speech today.

This debate follows a similar one in March this year, which I initiated. I started that debate by saying:

“I want to outline what steps might be taken in the next Parliament to improve housing outcomes for everyone”.—[Official Report, 14/3/24; col. 2208.]


I then outlined a large number of policy changes and, in response to three of my suggestions, the noble Baroness, Lady Taylor, then in opposition, said:

“He raised some important issues around downsizing incentives, incentivising to sell properties from the private rented sector and institutional finance, especially pension funds. That is something we definitely have to look at”.—[Official Report, 14/3/24; col. 2231.]


So I will briefly refer to those three initiatives and gently inquire about progress.

I begin with the last, as the need for institutional finance for rented accommodation has been underlined by the passage of the Renters’ Rights Bill. I support that Bill, as I did its predecessor, the Renters’ Reform Bill, but, as I said then, it must be accompanied by measures to increase supply. All the evidence is that private landlords are exiting the market—a process accelerated by the recent Budget. The number planning to sell is predicted to grow exponentially next year, with a massive 41% of private landlords planning to sell at least some rental properties and only 6% planning to buy.

This has an important impact on rents. Recent figures from Zoopla show that there are now 21 households bidding for every property to rent. Recent Budget decisions were branded as “disappointing” by Paul Johnson, the director of the IFS. Referring to stamp duty, he said that

“at least part of the consequence will be to reduce the supply of rental housing and so increase rents”.

We need to put the private rented market on a much more sustainable basis.

Other countries have a different model, which we should progressively adopt. In Europe, long-term institutional finance provides secure, well-managed rental accommodation. In this country, it provides just 2% of the rented stock. We need progressively to reduce our overdependence on the private landlord, who can release this capital only by selling, and get the financial institutions to invest in what historically would have been an even better investment than equities. At the meeting that the Minister was kind enough to hold with me last week, she explained that she was working on this with the Treasury, which also wants pension funds to invest more in the country’s infrastructure—so where better to start than housing? Local authority pension funds have an interest in increasing housing supply, in turn helping the Government to achieve their ambitious target of 1.5 million new homes. We need urgent progress on that front.

I turn next to downsizing initiatives. There are 3.6 million homes with two or more spare bedrooms. Many older people want to trade down or rightsize, freeing up their homes for young families. An older person triggers a chain of movements promoting labour mobility and making better use of the country’s housing stock. In the medium term, the planning system should be much more proactive in ensuring the right mix of new build, and we look forward to next week’s NPPF to see whether there is a step in that direction. Professor Mayhew estimated that we need 50,000 homes per year for older people who want to rightsize, but we are producing only 8,000.

Finally, on incentivising to sell properties from the private rented sector, many families have to rent but, as I have said, private landlords are leaving the market due to high interest rates, concerns about impending legislation, a less attractive tax regime and new energy efficiency standards. We should say to private landlords that, if they sell to their tenant, no capital gains tax and no stamp duty would be paid. This would be not a right to buy but an incentive to sell. This would have a dramatic effect on home ownership for those who would prefer to own and not rent; it would almost certainly lower their housing costs and enable them subsequently to move up the home ownership ladder. The landlord could realise their capital without having to give notice to the tenant. It would be a win-win policy that I would gladly allow the Government to adopt.

I look forward to hearing from the Minister about the progress on the three initiatives that she commended only a few months ago.